To really get to the next level to be a gold star conscious spender you have to start assessing your thoughts before and after you make a purchase and question the validity of those thoughts.
As you list spending and estimate how much you will be spending, I find that some things have zero emotional charge, and other things had a whole story attached to them (stories are always a goldmine of insight).
In general, I find that you can group your spending into four categories — which can help you unravel the stories you’re telling around that spending.
1. Avoidance spending
This means you’re spending money to avoid something – usually to avoid worry, fear, pain, doubt or another negative emotion. This might be associated with the belief that you need to spend money to fix something.
This is like the rationale, “I need to buy this piece of exercise equipment to lose weight or to work out regularly.” We know that’s not true. You can work out with nothing but your body! But that shiny piece of equipment seems important.
Any time you’re spending money to avoid some kind of fear or doubt or spending money to fix something, it’s not going to work out. Whenever you see one thing or one person as the end-all solution to your problems, you really need to go deeper and examine what you hoped that expense is going to do to fix something in your life.
Once you acknowledge the thought, it often becomes less urgent.
2. Automatic spending
The automatic spending is most of your spending month-in and month-out: stuff like rent, mortgage, gas, or groceries. You probably don’t have any real thoughts one way or another when you engage in this kind of spending.
This is also where people get into trouble over-buying things that they really can’t afford like takeout food, books or coffee.
This is an opportunity area, because most of the time, automatic spending fits into your cash flow, it’s just that it’s not meaningful. I used to go into Barnes & Noble and spend $100 on books, and for a while I thought that was meaningful. But now I know that if I’m doing that, there’s something else going on. I enjoy the books, sure. But there are other ways for me to have more meaning from reading those books without spending $100.
Automatic spending is not something that you have to (or even can) completely eliminate. But, you just have to be as conscious as possible about it and be able to get the best use out of every dollar. That means you have to maintain constant awareness.
For me, that’s essential with automatic spending – to make it not SO automatic.
3. Impulse Spending
I associate impulse spending with spending money on something that wasn’t a priority until you saw it.
I can go into a store like Target or Costco and spend a ton without realizing. It’s that constant joke that you can’t get out of Target for less than $100 — even if you just went in for milk.
Everyone has different ways of controlling impulse spending. I’ve heard people say, “You have to wait a week.” There was even somebody I heard say, “If it costs over $50, then you have to wait,” or “If it costs $100, you have to wait 14 days.”
What I noticed was, the less I went into stores, the less I spent. Then, I noticed that when I was going through a particularly lean time budget-wise in my life, I just stuck to my list. I learned that if I had a list it was easier for me, because I told myself I couldn’t deviate from the list. Then I was fine; the higher power in my life was sticking to the list. Other people make it easier by only bringing the cash that they plan on spending.
The point is: You never need to impulse buy. If you really decide that you need something, you could always go back for it after thinking it through. Find the rule that works for you to help curb impulse spending.
4. Occasional Spending
Occasional spending is spending that falls outside the normal budget, usually for something special that you don’t buy all the time. For me, that’s like clothes or furniture.
Some people have a problem because they never get around to buying those big, occasional things. Other people have issues because they spend too much, or buy too much around that thing.
Either way, we are placing too much emotional importance in that object. This happens when we haven’t clarified exactly what is going to make us happy — or that this thing will make us happy at all. I’ve been at both ends of the scale.
What category is most of your spending?
When you are working on conscious spending (NOT budgeting) ask yourself:
Which type of spending do I see the most of?
Which is the most problematic for me?
Where can I cut back without emotional impact? What would be emotionally the hardest to cut?
Once you know the answers to some of these questions, you can rein in your spending consciously, without having to resort to a dictatorial budget!
If you’re thinking about your own spending,you might like to read more – check out my free ebook Getting Started With Conscious Spending – you can download it here.